Samsung Electronics reports £2.3bn profit for second quarter

Samsung Electronics has reported a record operating profit for the second quarter of 2010 largely driven by its components division, backed by increased smartphone sales.

The manufacturer posted a net profit of 4.28 trillion Korean won (£2.3bn) - a rise of 83% on the same period in 2009 - on revenues of 37.89 trillion won (£20.4bn) up 17% on the previous year.

The telecommunications part of the business, which includes Mobile Communications and Telecommunication Networks, posted an operating profit of 630 billion won (£340.5m) on revenue of 8.78 trillion won (£4.7bn).

The company sold 63.8 million handsets during the second quarter, an increase of 22% year on year. However, increased market competition caused a slight decline in average sales price. Touch-screen mobile handsets made up 30% of Samsung’s unit sales during the quarter, up from 15% a year ago.

The manufacturer said the results for the quarter ended 30 June 2010 were largely driven by its components division, which include the semiconductor and LCD businesses. It reported that its set businesses comprising digital media, IT solutions and telecommunications ‘also performed well despite increased price competition and uncertain global consumer sentiment’.

Robert Yi, vice president and head of Samsung Electronics’ Investor Relations team, said: ‘In the second quarter, our component businesses performed very strongly, yet it was a more challenging quarter for our set businesses. With intensified competition throughout the digital media and mobile industries going forward, it may become a challenge to maintain current profitability levels.

He added: ‘However, we will continue to focus on introducing differentiated products and widening our technology leadership in components to meet these difficult market conditions.’

Samsung said that strong seasonal demand for core components would drive its performance in the third quarter, although increased market supply is also forecast. However, the manufacturer forecasts that continued price competition in its set businesses would put downward pressure on profit margins in the third quarter.

Despite that the company said that in the third quarter it aims to increase its share of the smartphone market through further sales of its flagship devices such as the Galaxy S (pictured) and Wave.

It reported that the Galaxy S has been chosen by more than 100 network operators around the world. Samsung will launch a range of mid-end smartphones as part of its strategy to provide mobile devices for every lifestyle.